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CvT: Dancing a Byte Over the Line for TikTok

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Tensions between the US and China have reached a boiling point as the threat of a TikTok ban looms in the near future. The owner of TikTok, Bytedance, is now obligated to select an American company to acquire TikTok if they want to continue business in the United States.

Those unfamiliar with TikTok may only view the platform as another standard social media app for the younger generation. However, TikTok currently holds a valuation of US$50 billion and has an estimated 80 million users within the United States alone. Labeling TikTok as another social media app fails to acknowledge the broader economic implications of the platform and the political impact its forced acquisition holds within the United States.  

Trump & Xi trade blows

President Trump announced his decision to ban TikTok’s parent company, ByteDance, in the United States through an executive order on August 6, citing national security concerns. If the executive order comes to fruition, it would effectively cease involvement of TikTok from the United States’ marketplace. As the confrontation between ByteDance and the United States continues, experts argue that the ban on other Chinese tech conglomerates like Huawei and Tencent is not solely about national security, but also a reflection of the power struggle between the two nations. Cited as a “geopolitical dogfight,” the acquisition of TikTok has the potential to alter the landscape of big tech between the two countries. 

In a major pushback against the Trump administration, the Chinese government filed a lawsuit in federal court claiming President Trump’s executive order prohibits Bytedance from “due process protections of the Fifth Amendment.” Beijing also added TikTok’s technology to a list of products “critical to national security,” making it illegal for ByteDance to sell its technology and algorithm to any foreign buyer without prior government approval. Acknowledging its position as the center of a diplomatic feud, ByteDance immediately agreed to the Chinese government’s terms, giving China the ultimate say in whether or not to sell its technology to the US. With TikTok given until September 20 to accept a deal, several big names like Microsoft, Oracle, and Walmart have been thrown into the mix. Ultimately, Oracle was announced as the winner to acquire TikTok. This agreement between Bytedance and Oracle now leaves China with the difficult decision to yield or bear the cost of TikTok’s billion-dollar price tag.

Bottom line

While the fate of TikTok remains undecided, the Trump administration continues to add other Chinese tech conglomerates to its technology “blacklist.” Next on the list may be the Semiconductor Manufacturing International Corporation (SMIC), the Shanghai-based chip giant. Rumors swirling around Washington quickly sent SMIC’s shares plunging 23% Monday morning. A spokesperson for China’s Foreign Ministry decried the threat as an act of “blatant hegemony” and accused the US of “breaking international trade laws.”

These actions have experts wondering whether this strategy is part of Trump’s reelection campaign or, perhaps, that the Trump administration is attempting to establish a hardline against China. As diplomatic tensions between the US and China continue to escalate, it is unclear whether the two countries can reach a truce, or if the power struggle over the tech industry sets precedent for broader bilateral relations.

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